Primary Goal for the G20
In his initial meeting with the G20, Pres. Obama should use his immense world wide popularity and his natural ability to forge compromise to initiate a reasonable, comprehensive system of international financial regulation. There is reason to believe that many of the G20 see such reform as needed to calm fears, bring stability and build confidence in the world’s interconnected financial institutions. Without efficient global financial markets we cannot reach equilibrium and restart growth. Initial areas to be addressed include the level of government involvement that is necessary and that is tolerable, the treatment of derivatives, and setting capital and liquidity requirements.
It is futile to pressure the G20 nations to adopt our idea of an economic recovery jump started by an enormous stimulus package. Rightly or wrongly, they do not see that in their best interest. In addition, many countries are reluctant to take guidance from the US whom they hold as responsible for the world wide financial crisis.
Monday, March 30, 2009
Monday, March 23, 2009
Glass Half Full?
Glass Half Full?
For me that would be a “yes.”
Starting last spring we had the Fannie and Freddie debacles, an extended period with no visible leadership in Washington, train loads of toxic assets on the books of most lending institutions, inability in all sectors to obtain credit, layoffs in most industries, losses in the stock market, plummeting sales of new and existing homes, and defaults on home mortgages, an astronomical deficit, and lessening revenues. Considering this, I’d say this is about the most severe recession that I have known. So how can my glass be anywhere near half full?
I have no choice. Optimism is our only hope! Jon Stewart may want to borrow my line; it’s funny but true. We’ve gotten some much needed leadership in Washington, Congress somehow passed the stimulus package (American Recovery and Reinvestment Act/ARRA), and the Congressional Budget Office (CBO) has forecast unemployment will peak at 9.4% in late 2009 or early 2010. Now we need investors to get back in the market. I don’t think we will rebound over night. I am looking for signs of improvement. That’s where it starts. Optimism may breed confidence.
For about the last two weeks, we have seen some life in the markets also it appears that the housing market may be stabilizing so why did I get up this morning to hear gloom and doom on the morning news show? While I was still sipping my coffee, analysts were predicting that Wall Street would be positive about Treasury’s plan to partner with private investors to buy up toxic assets. But the pessimistic talk on the TV continued, they had already written there forlorn script and I had to listen to it. Joe Scarborough threw a temper tantrum because a couple of guests thought the Obama administration was doing pretty well, considering what they had to deal with. That was at 9:00 a.m.
Now we’re at the closing bell on Wall Street. Let’s recap. We’ve seen Sec. Geithner’s plan was a hit with the financiers and they announced better than expected figures on existing home sales. Volume was up, the NYSE closed up about 500 points, all DOW stocks closed higher, the S&P had its best day this year, NASDAQ was up nearly 7% - back above 1500, bank stocks up, tech stocks up, home builders, retailers, industrials, transportation and energy sectors all closed up. The DOW and NASDAQ both are on track for their biggest monthly percentage gains since 2002. The S&P is on pace for its best monthly percentage gain since 1991. The Board is green.
I know this may be one wonderful isolated trading day but then again it may signal a turn around. I know that if the market keeps going in a positive direction before long there will be profit taking and it’ll dip again. But for now things are better than they were.
WILL SOMEONE PLEASE TELL THE TALK SHOW HOSTS?
For me that would be a “yes.”
Starting last spring we had the Fannie and Freddie debacles, an extended period with no visible leadership in Washington, train loads of toxic assets on the books of most lending institutions, inability in all sectors to obtain credit, layoffs in most industries, losses in the stock market, plummeting sales of new and existing homes, and defaults on home mortgages, an astronomical deficit, and lessening revenues. Considering this, I’d say this is about the most severe recession that I have known. So how can my glass be anywhere near half full?
I have no choice. Optimism is our only hope! Jon Stewart may want to borrow my line; it’s funny but true. We’ve gotten some much needed leadership in Washington, Congress somehow passed the stimulus package (American Recovery and Reinvestment Act/ARRA), and the Congressional Budget Office (CBO) has forecast unemployment will peak at 9.4% in late 2009 or early 2010. Now we need investors to get back in the market. I don’t think we will rebound over night. I am looking for signs of improvement. That’s where it starts. Optimism may breed confidence.
For about the last two weeks, we have seen some life in the markets also it appears that the housing market may be stabilizing so why did I get up this morning to hear gloom and doom on the morning news show? While I was still sipping my coffee, analysts were predicting that Wall Street would be positive about Treasury’s plan to partner with private investors to buy up toxic assets. But the pessimistic talk on the TV continued, they had already written there forlorn script and I had to listen to it. Joe Scarborough threw a temper tantrum because a couple of guests thought the Obama administration was doing pretty well, considering what they had to deal with. That was at 9:00 a.m.
Now we’re at the closing bell on Wall Street. Let’s recap. We’ve seen Sec. Geithner’s plan was a hit with the financiers and they announced better than expected figures on existing home sales. Volume was up, the NYSE closed up about 500 points, all DOW stocks closed higher, the S&P had its best day this year, NASDAQ was up nearly 7% - back above 1500, bank stocks up, tech stocks up, home builders, retailers, industrials, transportation and energy sectors all closed up. The DOW and NASDAQ both are on track for their biggest monthly percentage gains since 2002. The S&P is on pace for its best monthly percentage gain since 1991. The Board is green.
I know this may be one wonderful isolated trading day but then again it may signal a turn around. I know that if the market keeps going in a positive direction before long there will be profit taking and it’ll dip again. But for now things are better than they were.
WILL SOMEONE PLEASE TELL THE TALK SHOW HOSTS?
Thursday, March 12, 2009
Earmarks
Earmarks
Article 1 of the Constitution grants to Congress all legislative powers, the authority to raise taxes, pay debts and provide for the common good. Passing the budget resides within those powers. Administration of the appropriated funds then rests in the Executive branch of the government.
We ordinarily see appropriated funds go to the proper agency to be doled out for worthy projects. For example, monies to be used for education are administered by the Department of Education. The executive agency uses its own criteria to prioritize projects and a process, usually through competitive bidding, to select contractors to carry them out. Somewhere along the way Members of Congress figured out that they could direct portions of the budgeted funds to their favorite projects or to selected companies in their home districts. I guess everybody can identify at least one such project. Does “highway to nowhere” ring a bell? Passage of spending for hometown projects garner their sponsors plenty of constituent praise and probable reelection in the future. The legislators are “bringing home the bacon” just like a good daddy should. “Bacon” equals “pork.” This is nothing new. The term “pork barrel spending” has been in Webster’s Dictionary since the early 1900s. It was defined as “a government appropriation that provides funds for local improvements designed to ingratiate legislators with their constituents.” It hasn’t changed in 100 years.
These special expenditures that we also call earmarks don’t actually increase the amount of money in the budget; they only direct where the funds will be spent. The appropriated funds still go to the government agency involved but instead of the usual process of the agency selecting projects and conducting competitive bidding, the agency merely becomes a conduit, basically giving up its administrative duties.
I’m sure most local projects designated as earmarks have merit but they create several problems. First, the earmark projects go to the head of the list of projects, they don’t go through the scrutiny required of all other federally funded projects. Community Redevelopment Act funding of a new amphitheater in wealthy Boca Raton may not be as worthwhile as funding a community theater in Belle Glade, an extremely poor community in a region that has no theater at all. Second, where contracts are directed to specific companies without competitive bidding there is an obvious problem in that we may not get the best price for the service or product. Third, there is no accountability for the misdirection of funds from more worthwhile projects. Earmarks may be created in committee or inserted into a bill without attribution to a Congress member. There’s not much objection to even the silliest initiative because the instigators use their clout, mostly earned through longevity in Congress, to push through their pet projects. In addition, a vote for a pet project may be used as a bargaining chip, you support my project and I’ll support yours. We both win. The only ones to lose are the citizens who would benefit by more worthwhile projects displaced by the trivial and the taxpayers across the country who pay for them.
Until the last couple of years I never thought about earmarks. To me that was just how things were done. I credit Sen. John McCain with my enlightenment. Unfortunately, while many politicians jumped on the bandwagon of decrying earmarks as the work of the devil they were filling spending bills with their own pet projects. Just this week, Sen. Mitch McConnell and 34 others were exposed for their hypocrisy in this regard.
Yesterday, President Obama proposed new rules for earmarks. A good time to do so since he was signing a budget that contained 8500 earmarks worth more than $7.7 billion, less than 2 % of the total amount but never the less... Here are the important aspects of the president’s earmark reform plan.
•Earmarks would be submitted to the appropriate agency for review and if found not to be for a legitimate public purpose they would be eliminated.
•Any earmark aimed at a private company must be subject to competitive bidding.
•Earmarks must never be traded for favors.
•Earmarks have to be posted in advance on the Web and
•Publicly aired in hearings before being inserted into spending bills.
These proposals seem reasonable to me and I hope that Members of Congress agree. If they don’t agree, I hope they will be shamed into going along. Even if the dollars appropriated remain the same we will have restored some of the public’s confidence in the legislative branch, and helped to eliminate less worthy projects making way for the most important ones.
Article 1 of the Constitution grants to Congress all legislative powers, the authority to raise taxes, pay debts and provide for the common good. Passing the budget resides within those powers. Administration of the appropriated funds then rests in the Executive branch of the government.
We ordinarily see appropriated funds go to the proper agency to be doled out for worthy projects. For example, monies to be used for education are administered by the Department of Education. The executive agency uses its own criteria to prioritize projects and a process, usually through competitive bidding, to select contractors to carry them out. Somewhere along the way Members of Congress figured out that they could direct portions of the budgeted funds to their favorite projects or to selected companies in their home districts. I guess everybody can identify at least one such project. Does “highway to nowhere” ring a bell? Passage of spending for hometown projects garner their sponsors plenty of constituent praise and probable reelection in the future. The legislators are “bringing home the bacon” just like a good daddy should. “Bacon” equals “pork.” This is nothing new. The term “pork barrel spending” has been in Webster’s Dictionary since the early 1900s. It was defined as “a government appropriation that provides funds for local improvements designed to ingratiate legislators with their constituents.” It hasn’t changed in 100 years.
These special expenditures that we also call earmarks don’t actually increase the amount of money in the budget; they only direct where the funds will be spent. The appropriated funds still go to the government agency involved but instead of the usual process of the agency selecting projects and conducting competitive bidding, the agency merely becomes a conduit, basically giving up its administrative duties.
I’m sure most local projects designated as earmarks have merit but they create several problems. First, the earmark projects go to the head of the list of projects, they don’t go through the scrutiny required of all other federally funded projects. Community Redevelopment Act funding of a new amphitheater in wealthy Boca Raton may not be as worthwhile as funding a community theater in Belle Glade, an extremely poor community in a region that has no theater at all. Second, where contracts are directed to specific companies without competitive bidding there is an obvious problem in that we may not get the best price for the service or product. Third, there is no accountability for the misdirection of funds from more worthwhile projects. Earmarks may be created in committee or inserted into a bill without attribution to a Congress member. There’s not much objection to even the silliest initiative because the instigators use their clout, mostly earned through longevity in Congress, to push through their pet projects. In addition, a vote for a pet project may be used as a bargaining chip, you support my project and I’ll support yours. We both win. The only ones to lose are the citizens who would benefit by more worthwhile projects displaced by the trivial and the taxpayers across the country who pay for them.
Until the last couple of years I never thought about earmarks. To me that was just how things were done. I credit Sen. John McCain with my enlightenment. Unfortunately, while many politicians jumped on the bandwagon of decrying earmarks as the work of the devil they were filling spending bills with their own pet projects. Just this week, Sen. Mitch McConnell and 34 others were exposed for their hypocrisy in this regard.
Yesterday, President Obama proposed new rules for earmarks. A good time to do so since he was signing a budget that contained 8500 earmarks worth more than $7.7 billion, less than 2 % of the total amount but never the less... Here are the important aspects of the president’s earmark reform plan.
•Earmarks would be submitted to the appropriate agency for review and if found not to be for a legitimate public purpose they would be eliminated.
•Any earmark aimed at a private company must be subject to competitive bidding.
•Earmarks must never be traded for favors.
•Earmarks have to be posted in advance on the Web and
•Publicly aired in hearings before being inserted into spending bills.
These proposals seem reasonable to me and I hope that Members of Congress agree. If they don’t agree, I hope they will be shamed into going along. Even if the dollars appropriated remain the same we will have restored some of the public’s confidence in the legislative branch, and helped to eliminate less worthy projects making way for the most important ones.
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